On April 8, 2014, China’s State Administration of Taxation (SAT) published the details of simplified arrangements for micro and small enterprises that are looking to gain access to additional tax reductions made available by the Ministry of Finance. The MOF has clarified that micro and small-sized enterprises, are now defined for this purpose to include all enterprises with incomes up to RMB100,000. This takes effect from January 1, 2014.

As a result of the new definition the number of firms eligible for the existing 50% tax break has increased. Companies whose income is above this threshold are liable to tax at the usual 20 percent rate of income tax.  There has also been an extension of the time for which the tax break is available. Although it was originally planned to end on December 31, 2015 the tax relief has been extended for one more year to December 2016.

The SAT has also clarified that eligible businesses can obtain this tax relief without having to seek prior approval from the SAT.